Edwardsport Plant

Edwardsport Plant is a proposed power generation plant in Edwardsport, Indiana.

In 2006, Duke Energy and Vectren proposed the Edwardsport coal plant to be built in Knox County, Indiana, intended to replace two existing oil and coal plants built in the 1940’s, the Edwardsport Generating Station (existing). There is significant opposition to the plant, both because the concentration of coal generators in this area is one of the highest in the world, and because the local power needs have already been met.

In May 2007, environmental and consumer groups – including Citizens Action Coalition of Indiana, Save the Valley, the Sierra Club and Valley Watch – testified that the proposed plant is not the best available option. These groups have urged the Indian Utility Regulatory Commission (IURC) to direct Duke Energy/Vectren towards energy efficiency and renewable power. Among the many objections to the plant is the significant potential for wind generation in Indiana, which could meet or exceed the energy capacity of the new Edwardsport plant. The IURC approved the plant on Nov. 20, 2007. An air permit from the Indiana Dept. of Environmental Management (IDEM) is still pending; the comment period for the IDEM hearing closes Dec. 31, 2007, but the Citizen’s Action Coalition is trying to get that deadline extended until February.

In April 2008, the Sierra Club filed suit in federal court in Indiana seeking to hold Duke Energy accountable for failing to install modern pollution controls at the existing Edwardsport plant. According to the Clean Air Act, coal-fired power plants are required to install modern pollution controls when they upgrade the rest of the facility, something the Sierra Club contends Duke has not done.

In May 2008, Duke Energy announced that the new IGCC plant would cost $2.35 billion, an increase of $365 million from earlier estimates. If approved, the overage would be paid for by a 2 percent rate increase between 2008 and 2013. Duke has been given a grant of $1 million from the U.S. Department of Energy's Regional Carbon Sequestration Partnership Program "to study the permanent storage of carbon dioxide from the plant near the site."

On October 28, 2008, three citizen and environmental groups filed a request for public record disclosure to obtain records detailing Governor Daniels' actions in promoting Duke Energy's proposed Edwardsport power plant. The Hoosier Chapter of the Sierra Club, Citizens Action Coalition, and Valley Watch are seeking to determine whether the Daniels administration and the Indiana Utility Regulatory Commission (IURC) violated ratepayer protections in an effort to fasttrack the new plant. The citizen groups want to reveal the level of financial support received from Duke Energy in support of the Governor's energy summit, which was held in Indianapolis two months before the election. The groups are also looking for any evidence of improper communications between Duke and the IURC.

On January 7, 2009, the Indiana Utility Regulatory Commission approved Duke's request to pass increased construction costs for the plant on to its Indiana customers. The ruling clears the way for Duke to raise rates by 18 percent over the next five years.

May 2009 update: Under the proposed Waxman-Markey Climate Bill, two Duke Energy plants - Cliffside and Edwardsport - are exempted from new pollution regulations. The bill has been criticized because Duke Energy helped draft the US-CAP blueprint that provided the basis for bill, and CEO Jim Rogers testified before the House Energy and Commerce Committee hearings on the bill.

July 2009 update: Duke filed a proposal for a carbon dioxide storage project with the Indiana Utility Regulatory Commission. The company would invest over $120 million to store a portion of the CO2 emissions from the Edwardsport plant in saline aquifers and in depleted oil and gas fields. The experiment would result in an average 1 percent rate increase for customers between 2010 and 2013. Duke is also applying for a federal grant to cover about half of the project's costs. If the project is successful, Duke will apply to capture and store the emissions on a permanent basis.

October 2009 update: Construction on the plant is about 30 percent complete. Duke expects to have the plant in service in 2012.

November 2009 update: Duke announced that the construction costs for Edwardsport have increased at least six percent. The company said building the plant would cost at least an extra $150 million. Originally the company estimated a 17 percent rate increase to cover construction costs.

April 2010 Update: Duke Energy Indiana filed testimony and exhibits with the Indiana Utility Regulatory Commission increasing the cost estimate for the Edwardsport coal gasification plant under construction, adding approximately $530 million to the previously approved $2.35 billion cost. Indiana state utility regulators must review and approve Duke Energy Indiana’s filing before any new costs can be phased into customer electric rates. If approved, the increase in costs will add about 3 percent to the project’s customer rate impact, and an overall average 19 percent rate increase by 2013.

July 2010 Update: Duke is marketing $500 million of bonds to help fund the power facility’s construction and to repay bank debt. The 10-year first-mortgage bonds may be sold as soon as July 6, 2010, and pay about 80 basis points more than similar-maturity Treasuries, according to a person familiar with the transaction. A portion of proceeds from the debt sale will be used to fund the coal plant’s construction, said Tom Shiel, a spokesman for Duke Energy Corp. The Edwardsport plant is more than 55 percent complete, and is expected to be operational in 2012.

November 2010 Update: State regulators met the first week of November to consider Duke Energy's rate hike request. The plant's cost is now estimated at nearly three billion dollars, twice its original estimate. The Indiana Utility Regulatory Commission (URC) will hold a hearing on Nov. 3 in Indianapolis. Governor Mitch Daniels later fired the URC’s chairman David Lott Hardy for allowing agency official Scott Storms to continue presiding over the case even after talking with Duke about a job opportunity, which Storms took in September 2010.

December 2010 Update: Duke puts former URC official Scott Storms and Mike Reed, the Duke Energy Indiana president who hired him, on administrative leave. Afterward, e-mails obtained by the Indianapolis Star showed that Jim Turner, who headed Duke’s regulated utilities, discussed Storms and Reed with former commission chairman David Hardy, both of whom were dismissed over the ethics issues. Turner and Reed were part of the team that negotiated the settlement with the Indiana Utility Customer Counsel, the Duke Energy Indiana Industrial Group and Nucor Steel Indiana, so Duke Energy withdrew a proposed settlement worked out with with the Indiana customer groups. The company and groups hope to negotiate a new settlement that will not be tainted by the ethics inquiries. On December 6, 2010, James Turner resigned.

January 2011 Update: In a confidential letter to Duke dated Oct. 5, 2010, project manager Brian Hartman of engineering contractor Bechtel Corp., wrote that Duke had taken "significant risks" with the project, in violation of its contract with Bechtel. The risks included limiting oversight and monthly reports, consolidating functions, reducing documentation, and taking personnel action against Bechtel management's recommendations, in the name of expediency. Duke, in turn, had rated Bechtel's performance on the project as "very low" in an internal e-mail. In another email, top Duke executive Richard W. Haviland had said of the many accidents at the project: "We need an exorcist on this job." The letters and emails were among dozens between the companies released after a filing was made by a collection of consumer and environmental groups, who want the state to investigate whether Duke mismanaged the project, committed fraud, or concealed vital facts. If the groups can prove that, Duke would have to absorb a large portion of the construction costs, without passing them along to ratepayers.

Meanwhile, some are questioning a timetable for approving the plant, saying it leaves too little time for public input. The Indiana Utility Regulatory Commission's schedule for the plant would conclude hearings by early May 2011, which attorneys say appears expedited. The Indianapolis Star reported that the timetable was largely put together part by Randolph Seger, an Indianapolis lawyer representing the Indiana Finance Authority, which has a 30-year deal to buy the plant's synthetic natural gas. Seger has said the project is a "good one for Indiana and the benefits should be realized as quickly as possible."

March 2011 Update: On March 11, 2011, Duke asked state regulators to approve the company's newly drafted plan to cap at $2.72 billion, and Duke Indiana President Doug Easamann said the company remains committed to completing the 618-megawatt Edwardsport plant despite growing protests about the overruns and ethics issues involving the regulatory approval process.

July 2011 Update: The Indiana Office of Utility Consumer Counselor rejects Duke Energy's request for an extra $530 million to recover more of the cost overruns of the Edwardsport plant: "Duke has not demonstrated any budgetary constraints on this project," the office's Barbara Smith wrote in pre-filed testimony to the commission. "There appears to be a lack of responsibility or accountability on the part of those causing these multi-million dollar cost overruns. In addition, there has been no evidence presented to indicate that Duke management, or any other entity, has conducted any kind of timely prudency review regarding these cost overruns."

Project Details
Sponsor: Duke Energy/Vectren Location: Edwardsport, Knox County, Indiana Size: 630 MW Type: IGCC Projected in service: 2012 Status: Permit application pending (November 2007)

Financing

 * Citibank
 * Credit Suisse
 * Goldman Sachs
 * Merrill Lynch

Citizen Groups

 * Citizen Action Coalition of Indiana, Kerwin Olson, kolson@citact.org.
 * Indiana Sierra Club
 * Valley Watch, John Blair, contact@valleywatch.net.
 * Polk & Associates, Jerome Polk, info@polk-law.com (legal counsel representing the above organizations)

Related SourceWatch Articles

 * Edwardsport Generating Station (existing)
 * Carbon Capture and Storage
 * Indiana and coal
 * Existing U.S. Coal Plants
 * US proposed coal plants (both active and cancelled)
 * Coal plants cancelled in 2007
 * Coal plants cancelled in 2008
 * State-by-state guide to information on coal in the United States (or click on the map)